Blog replay: Day 3 of Detroit bankruptcy eligibility trial

Detroit’s bankruptcy eligibility trial starts at 9 a.m. today, with the city gearing up to prove that it meets the specific legal criteria for Chapter 9 bankruptcy. Follow along as Detroit Free Press Staff Writers Brent Snavely and Nathan Bomey report live from the courthouse.

UPDATE: It’s all about who is qualified to be an expert witness in Detroit’s bankruptcy case this morning.

Opponents of the bankruptcy filing are trying to get certain witnesses struck from the bankruptcy eligibility trial, saying some of them know about as much about Detroit’s finances as a taxi driver. Given their lack of knowledge, opponents argue, they have no business testifying in a trial about whether Detroit was eligible to file for bankruptcy in the first place.

In short, their testimony is "pure opinion" and therefore no good, they argued. That's what they argued in trying to strike the testimony of investment banker Ken Buckfire for not being an expert witness.

"The court would not have allowed the taxi driver to answer those questions. Mr. Buckfire is no more qualified to answer those questions than the taxi driver," argued a UAW attorney.

The same attorney argued that Ernst &Young witness Gaurav Molhatra is not an expert witness for the city, saying he was not directly involved in running the city, so has no inside knowledge about its finances.

Emergency manager Kevyn Orr and Michigan Gov. Rick Snyder argue there was no alternative, and the filing was legitimate. -- Tresa Baldas

by Detroit Free Press10/25/2013 1:44:27 PM

Nothing nefarious about witnesses having Excel speadsheets with city data, city lawyer argues. Excel comes pre-installed on computers.

UPDATE: A city attorney is defending its witnesses in the bankruptcy eligibility trial, saying they knew plenty to determine whether Detroit had to file for bankruptcy. And their testimony is reliable.• Specifically, city lawyer Geoff Stewart of Jones Day defended E& Y's Molhatra, saying he had necessary knowledge of city finances as he was hired in May 2011, well before the bankruptcy filing, to help with the city's finances.• He also argued that witnesses have to use assumptions in a case such as this, which involves assumptions. He also argued that there is nothing wrong about taking information from the city and putting it into a spreadsheet.• Opponents argued that the city's witnesses had no insider knowledge about the city's finances, but rather based their opinions on raw data provided to them by the city. Stewart said there's nothing wrong with that.-- Tresa Baldas

UPDATE: As far as U.S. Bankruptcy Judge Stephen Rhodes is concerned, an investment banker’s testimony about whether Detroit was eligible to file bankruptcy is good enough to stick in court.

Opponents had sought to strike the testimony of investment banker Kenneth Buckfire -- one of the city's witnesses -- arguing he is not an expert witness but rather a lay witness whose opinions carry about as much weight as a taxi driver. A cab driver wouldn't be allowed to testify in this case, they argued, so Buckfire shouldn't be, either.

Opponents also sought to strike the testimony of another witness for the city, Ernst & Young witness Gaurav Molhatra, arguing he was not directly involved in running the city’s affairs, and therefore had no insider knowledge about its finances. Rhodes disagreed, concluding that both witnesses had “extensive knowledge” about Detroit’s finances, and that the opinions of “lay people” with intimate knowledge about a particular issue are admissible and can be reliable. Just because someone isn’t an “expert witness” doesn’t mean they don’t have knowledge about a situation.

As for the taxi driver argument, Rhodes said, just because the cab driver wouldn’t be allowed to testify in the case doesn’t mean the city’s witnesses can’t because they have extensive knowledge about Detroit's finances.

At issue is whether Detroit was eligible to file for bankruptcy.

Buckfire, meanwhile, is now on the stand, facing cross-examination by opponents to the bankruptcy.-- Tresa Baldas

by Detroit Free Press10/25/2013 2:49:00 PM

Buckfire didn't personally make recommendation to emergency manager to cut pension benefits. But it was self-evident.